Benefits of consolidation

The white paper has been written by Catapult Transport Systems who undertake transport research on behalf of a number of organisations including Transport For London.

This report builds upon an existing document; ‘The Benefit of Consolidation Centres’ produced and facilitated by Meachers Global Logistics (MGL) to Transport Systems Catapult (TSC).

The MGL’s report analyses the economic benefits derived from real-world evidence data from the Carnival and Steve Porters case studies where Meachers is currently running two of its largest Consolidation Centres (CCs).

The analysis undertaken by MGL shows how consolidation reduces considerably the operational costs to all parties involved with the CC (both running fleet cost and penalty fees savings) and are of benefit to the environment through reduced emissions. We believe however, that there are further benefits not quantified that could contribute to make the case for the use of CCs.

In this regard, we enhance the analysis by considering additional operational costs savings across different impact categories as defined below:

  • Distance related costs: Consider costs that increase proportionally with the total distance travelled by the logistic suppliers. We consider fuel consumption, tyre wear and fleet repair and maintenance costs.

  • Time related costs: Consider costs that increase proportionally to the amount of hours operated by the logistics supplier. We include driver costs within this category.

  • Fixed costs: Considers costs that that are incurred regardless of the operation level undertaken by the freight transport fleet such as Vehicle finance and overhead costs.

More importantly, our analysis translates the emission savings presented in the MGL’s report into monetary values following the Transport Appraisal Guidance (WebTAG) methodology outlined by Department for Transport (DfT).

We quantify tonnes of carbon dioxide equivalent (CO2e) and NO2 emissions under each case study into monetary values using central estimates.

It is important to note that we do not have included PM10 within the environmental appraisal due to lack of data at this stage.

In addition, we acknowledge that there are further economic benefits arising from lower congestion levels and reduced accident rates due to the reduction of freight vehicles from the road that could also be quantified into monetary terms. We do not include them within this analysis due to lack of data at this stage.

While there is a grade of overlap between both the MGL report and the analysis presented here, the aim of the latter is not to be a substitute of the former but rather complement it providing additional insight into the benefits of running a CC.

Data is provided by MGL real world day-to-day operations from January to May 2017. We extrapolate this trend to account for the entire operational year based on a total of 250 operational days for Steve Porters and 284 for Carnival (in line with assumptions in the MGL report).

See the infographic about the benefits of consolidation centres.

We offer this white paper in the hope it will help you with your work. Download it now and please get in contact with us if we can help you with anything to do with consolidation centres.

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